4219 AU21 Case 1 - Individual Assignment #1 Rubric

Student Name HERE Section #: Class Time:

A B C D E F G H Papadakis, Kennia D.:

This is a numeric answer. Test variable independently to
quantify the effect on base case or DRAFT NPV. For
This assumption has been is the challenge DRAFT NPV changes? example: if cost of capital changes to 15% (hypothetically
Assumption documented on either Case Exhibit 2 or case PFD file challenged by (identify the valid? YES or Increases or decreases Revised NPV (if speaking), make the actual change in the assumptions
No. content. individual or function) NO If YES - why? - Support If NO - why? - Support NPV? applicable) Additional Notes table of case exhibit 2 and take note of the new NPV. All
1 Omission of the cost and depreciation of rolling stock (tank cars) Transport Division YES First, tank cars are parts of capital expenditure, which is NPV decreases £ 8.94 formulas are linked to the valuation.
included in asset
is in spending. Second, rolling stock cannot be so NPV decreases
Sales of incremental output Sales YES The industry its downturn, and the market is oversupply,
used in Rotterdam. In addition, Tank cars are considered to £ 7.01 Repeat this step for every line item on the input table, if
it is not guaranteed that the incremental output can be sold out.
signficant assets
Therefore, to changes
the challenge in layout
by Sales and flow
director of process. Such
is valid. applicable.
2 efficient gains should be included.
3 Cannibalization of Rotterdam Sales NO It can provide flexibility to all output. NPV decreases £ 6.40 If you are unsure about the variable in question, just
Investment in the EPC project Assistant Plant Manager YES First of all, there are ethics factors. The EPC program is no change £ - populate with a brief note on column H.
established in early 1960s, so the company may emotionally
appreciate its existence. In addition, agency costs may occur if
the EPC shut down. The amount of annual bonuses may be
affected.
4
Add inflation rate of 3% Treasury Staff YES The reason why the challenge is valid is that the inflation rate is NPV increases £ 14.70
5 consistencing in compounding and discounting.
6 Other? £ -
7 Other? £ -
8 Other? £ -
9 Other? £ -
10 Other? £ -

I recommand Morris to take the cost and depreciation of tank cars, keep operating the EPC project, and add inflation rate to
3%. However, I don't recommand to the sales of incremental outputs and cannibalization of Rotterdam.